Germany To Allow Insurers To Invest In Hedge Funds

by Philip Morton, Investors Offshore.com

07 July 2004

Proposed changes to Germany’s hedge fund laws will soon allow the country’s insurance companies to invest in certain hedge fund products, the Financial Times Deutschland has learned.

According to draft rules seen by the FT’s sister paper, Germany’s financial regulator, BaFin, will permit insurance firms to invest through funds of funds or single funds but will prohibit them from direct ownership of hedge fund products.

The text of the draft investment law has been passed on to the insurance industry for approval, and it is expected that the new rules will come into effect soon after this approval has been received.

It is reported that insurers are showing a keen interest in hedge funds, and Klaus Bollmann, chief financial officer at Union Alternative Assets, told FT Deutschland that in the long term, more than 5% of assets could be allocated to these investments.

Prior to the introduction of single hedge fund rules by BaFin in February, hedge funds in Germany were tightly restricted.

However, despite the removal of these barriers, the market has been slow to get off the ground, and some funds have complained that the new rules are too ambiguous.

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